What Is The Forecast For 2012 Real Estate Prices In The US?

The outlook for real estate prices in 2012 for the US is not great, but it’s not all bad news either. As the best predictor of future behaviour is to look at past performance, it helps to look at features of the real estate market in 2011 as a way of seeing what the future holds.

Real estate prices in 2011

No prizes for guessing that real estate prices generally went down across the board in 2011. On average, prices fell by around 5.6 percent over the year, with the national average house price sitting at $170,000.

Myth: Home prices never go down in San Francisco © by Global X

While it’s not been a great year, the downturn has slowed somewhat, indicating a bit of momentum gaining, and possibly pushing the price of real estate upwards. This is great for home owners, and should probably prompt those who have been waiting for the right time to jump into the market to sign on the dotted line now – as prices seem to be bottoming out.

How bad are house prices now?

The best way to judge just how bad house prices are now is to compare them to the boom time – of which 2006 was the height of real estate prices. A few figures to keep in mind are below – they are a little sobering, so be warned:

Average home price: In 2006 the average home price was around $240,000. Compared to today’s average price of $170,000 that is a drop of about 31 percent. Ouch.

Distressed sales: In 2006, distressed sales made up around 6 percent of real estate sales; compare that with more than 30 percent in 2011.

Opportunities for growth

The best metropolitan location for real estate in the near future is tipped to be Washington. This is because of lower unemployment (at around 5.5 percent), high affordability and with a low foreclosure rate. The estimate is that distressed sales in Washington are about 15 percent of total sales.

So it seems that Washington is the it location for getting into the real estate market now, as well as in early 2012. The underlying fundamentals are strong are present great opportunities to get started in real estate, or to broaden your portfolio.

2 Reasons to invest in real estate in 2012

2012 looks like a good year to get into real estate, and here are two good reasons why:

  1. Declines in home prices are slowing, and there are strong indications of a growing upward momentum. This is assisted by stronger economic forecasts including a lowering of unemployment rates.
  2. While sellers greatly outnumber buyers in the real estate market, the advantage lies in those who are looking to buy. The time to buy is now, while buyers hold a distinct advantage in negotiating purchase prices and terms.

If you are waiting for ‘the right time’ to invest in real estate, chances are you will miss the boat. Just like starting a family, there is no ‘right time’ – it’s best to assess your options, calculate the risks and get into it.

Note: data sourced from Clear Capital

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